Thousands of people in search of significant returns
are paying for advice on selecting the right property in mining towns,
regional centres and some cities ----- But be wary!!
The gloss is fading from many mining towns,
where not long ago ordinary houses changed hands for big sums because of
sky-high rents and yearly capital gains of 20 per cent-plus. Mines are
closing and winding back operations as China's economy slows and coal
and iron-ore prices fall.
Eg : Queensland's industrial and mining city of Gladstone is a red-flag example of what can go wrong with real estate investment. According to property valuers at Herron Todd White, the prices for older houses and units in the centre of Gladstone have fallen by as much as 20 per cent since last year.
HTW says the Gladstone property market - driven by liquefied natural gas and coal projects - is volatile, with the stabilisation in rents flowing through to softer capital values.
Andrew Wilson, senior economist at the Fairfax-owned Australian Property Monitors, says the boom in Gladstone house values since the late 2000s was driven by speculative buyers.
''Now investors who bought properties at $700,000 are struggling to get in the $400,000s for them when they sell. There's a 10 per cent vacancy rate and rents are falling - it's very hard to get a tenant in Gladstone.''
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